Background
Russia’s moves to sharply reduce natural gas flows into Europe have deepened the global energy crisis. Among the host of measures countries are taking in response to the crisis, heat pumps are one of the most important long-term solutions widely available today to reduce natural gas use for heating, improve energy security, keep consumers’ energy bills affordable, and make progress on reducing emissions. It is stated in the report that heat pumps are receiving unprecedented policy support through the European Union’s REPowerEU Plan, the US Inflation Reduction Act and other policy initiatives around the world. However, key barriers to further scaling up production and deployment of heat pumps remain, such as high upfront purchase prices and operational costs, the legacy of the existing building stock, limited manufacturing capacity, and a shortage of workers trained to install the pumps.
About the report
According to IEA’s press release Dr Fatih Birol, Executive Director of IEA, has stated that “heat pumps address many of policy makers’ most pressing concerns on energy affordability, supply security and the climate crisis all the pieces are in place for the heat pump market to take off, in a similar way that we have seen for other key climate technologies like solar PV and electric vehicles. Policy measures are in place today, but they need to be reinforced urgently to allow heat pumps to fulfill their significant economic and environmental potential.” During the report launch and press conference, he told that heat pumps is such an important clean energy technology today. Therefore a special report on heat pumps was needed beyond having its own chapter in the World Energy Outlook report.
This report is the first comprehensive global outlook on the subject. It conveys the message that heat pumps are a hyper-efficient and climate-friendly solution, which help consumers save money on bills and enable countries to cut reliance on imported fossil fuels, which is an important message today, when heating of most buildings on a global level still relies of fossil fuels. For many countries in Europe, the fossil fuels have to a large extent, been imported from Russia.
During the launch and press conference, the European Commission Director-General for Energy, Ditte Juul Jørgensen, told that in EU they are right now aligning all policies to facilitate the roll-out of heat pumps, for example the EPBD, the EED and Ecodesign regulations. One example is the phasing out of stand-alone fossil boilers by 2029. Heat pumps has also a central role in the REPowerEU policy package. However, even more needs to be done to support the heat pump sector and overcome barriers and therefore this report is extremely valuable.
Expected market development
Around 10% of space heating needs globally were met by heat pumps in 2021, but the pace of installation is growing rapidly, with sales at record levels. The heat pump market has been growing strongly in recent years, and global heat pump sales rose by nearly 15% in 2021, led by the European Union, where they rose by around 35%. According to the report, the heat pump sales are set to soar in the coming years when the energy crisis accelerates their adoption.
Heat pumps typically cost less over their lifetimes than fossil fuel boilers, thanks to their higher efficiency. At today’s energy prices, the analyses performed by IEA show that annual energy bill savings for households that switch to heat pumps can range from USD 300 in the United States to USD 900 in Europe. However, government policy support is needed to help consumers overcome heat pumps’ higher upfront costs relative to alternatives in many countries.
Since the technology is well proven, even in the coldest of climates and offers several benefits, IEA advises policy makers to put their weight behind this technology that is witnessing unprecedented momentum at the moment.
In a scenario in which all governments achieve their energy and climate pledges in full, heat pumps become the main way of decarbonizing space and water heating worldwide. The IEA estimates heat pumps have the potential to reduce global carbon dioxide (CO2) emissions by at least 500 million tonnes in 2030 – equal to the annual CO2 emissions of all cars in Europe today.
Leading manufacturers are seeing promising signs today and believe that sales could be tripled by 2030. Already today, there are announced plans to invest more than USD 4 billion in expanding heat pump production and related efforts, mostly in Europe.
During IEA’s launch of the report and press conference on November 30, Gerteric Lindquist, the CEO of NIBE, represented the heat pump industry and commented the report. He said it was almost overwhelming to hear the technology being so well acknowledged. He has been working within the heat pump industry for more than 35 years and has been waiting for this to happen. He confirmed that industry is going to take on this challenge very seriously, when they have this great support from IEA as well as from policy makers in different parts of the world. However, further policy support is still needed in some countries, e.g. there is still a need for pricing and taxation that favours heat pumps.
Challenges and opportunities
The rapid expansion of heat pumps presents some challenges, but the report highlights solutions to these barriers. Heat pumps will inevitably increase electricity demand. However, energy efficiency can greatly reduce the impacts on the grid, alongside with improved grid planning. Global heat pump supply and installation could require over 1.3 million workers by 2030, nearly triple the current amount, raising the potential for skilled labour shortages, especially for installers. Special training programmes are therefore needed.
Opportunities also exist for heat pumps to provide low-temperature heat in industrial sectors, especially in the paper, food and chemicals industries. In Europe alone, 15 gigawatts of heat pumps could be installed across 3 000 facilities in these three sectors, which have been hit hard by recent rises in natural gas prices, according to the report.
Different scenarios
Three different scenarios are compared in the report; each scenario is based on a different vision of how policy makers might respond to today’s crisis. In the Stated Policies Scenario (STEPS), they explore how the energy system evolves if we retain current policy settings. In the Announced Pledges Scenario (APS), governments’ climatic targets are achieved on time and in full. Only in the Net Zero Emissions by 2050 (NZE) Scenario, IEA works back from specific goals – the main one, in this case, being to cap global warming to 1.5°C – and show how they can be achieved.
The graphs below show how the heating capacity of heat pumps, and the share of heating needs they will cover, are expected to develop in the different scenarios. Around 20% of heating needs will be met by heat pumps in 2030, according to the Announced Pledges Scenario (APS), with China, North America and Europe remaining the leading markets; see Figure 1.7 below from the report. However, there is still a gap in the Net Zero Emissions by 2050 (NZE) Scenario in which the capacity and share need to increase, even more; see Figure 1.2 below from the report.
Further need for Research, Development and Demonstration (RD&D)
The network of HPT TCP has contributed with data, facts and review to this report for many different aspects. The long and consistent work within this collaboration programme has clearly contributed to the development of the technology, resulting in that it is now a mature, tested and proven technology which keeps millions of homes warm already today. However, to transform and decarbonize the energy system and to be able to reach the climate ambitions, further research, development and demonstrations are needed. HPT TCP provided input to describe these needs in the report, which can be found in Box 1.1 in the report and summarized as follows.
- smart and flexible features, interacting with the grid and other clean energy technologies
- higher efficiencies over a larger temperature range (very cold climates, higher heating temperatures)
- more compact design, improved ease of installation
- lower environmental footprints and ensured safety associated with the materials and refrigerants used
- adapting heat pumps for the most difficult conditions for carrying out building retrofits
- resource efficiency by optimizing the use of heat pumps for both heating and cooling purposes, including in commercial and industrial applications with simultaneous needs or using waste heat from air conditioning to fulfill heating needs
- heat pumps operated in a very low‐temperature thermal grid on a district or city level to be used as a heat sink and source simultaneously
- reduced noise
- non‐traditional compression technologies for heat pumps such as solid‐state (e.g. magnetocaloric, thermoelectric and elastocaloric) and gaseous (e.g. Brayton and Stirling cycles).
Read the full report: https://www.iea.org/reports/the-future-of-heat-pumps
Read the press release: https://www.iea.org/news/the-global-energy-crisis-is-driving-a-surge-in-heat-pumps-bringing-energy-security-and-climate-benefits